Deductive value exists for the case where there is no usable transaction value: the buyer and seller are related and the price cannot be trusted, or the sale was not for export to the US, or the price is simply not documented. The method works backwards from the only reliable number left, the price the goods actually sell for in the United States.
The logic is simple. The resale price contains the customs value plus everything that was added after import: the importer's profit, the commissions, the transport and insurance inside the US, and the duties and taxes. Subtract those, and what is left is the value at the border. The method is not an estimate. It is an arithmetic reversal of the real sale.
The deductions are the commissions and the profit and general expenses of the importer, the transport and insurance costs incurred inside the US, and the duties and taxes paid on the goods. Each deduction has to be documented, and the profit deduction is the one that gets argued most, because the importer's profit is not a standard percentage and CBP will ask how it was calculated.
The resale has to be of the imported goods, or of identical or similar goods, and it has to be in the greatest aggregate quantity, which means the price at which the largest number of units were sold. A single sale at a high price is not the basis. The price that most units actually sold at is, and the importer has to show the sales records that prove it.
Computed value is the other fallback, and it builds the value forwards instead of backwards: the cost of production, plus profit and general expenses, plus packing. It is the method that applies when the importer can document the manufacturer's costs, and it is often the more accurate one, because it starts from the factory rather than the market.
The importer gets a choice here, and it is one of the few in the valuation law. The importer may request that computed value be applied before deductive value, and CBP must honor that request. The choice matters because the two methods can reach different numbers, and the importer who knows which one is lower for their product should ask for it, in writing, before CBP chooses for them.
Deductive value lives or dies on the sales records. The importer needs the resale prices, the quantities sold at each price, the commissions paid, the transport and insurance costs, and the duties paid, all tied to the specific import. A general profit margin for the company is not enough. The deduction has to be for the goods in question, and the records have to show it.
The practical move is to keep the resale file with the entry file, so that when transaction value is challenged, the fallback is already built. An importer who scrambles to reconstruct resale prices after a Form 29 arrives will find the records incomplete and the deductions disputed. An importer who kept them together will have the value ready.
Keep reading: First Sale Rule: How It Cuts Duty on Multi-Tier Transactions, Royalties and License Fees: When CBP Adds Them to Value, How do assists and tooling costs change the customs value of imported goods?.
It is a customs valuation method that works backwards from the US resale price of the imported goods, or identical or similar goods, subtracting commissions and profit, transport and insurance, and duties and taxes. What is left is the customs value. It applies when transaction value cannot be used.
Yes. The importer may request that computed value be applied before deductive value, and CBP must honor that request. Computed value builds forwards from production cost plus profit, general expenses, and packing, and it can reach a different number, so the choice is worth making deliberately.
The price at which the greatest aggregate quantity of the goods was sold in the US, meaning the price most units actually sold at. A single sale at a high price is not the basis. The importer has to show the sales records that prove the quantity and the price.
Commissions and the importer's profit and general expenses, transport and insurance inside the US, and the duties and taxes paid on the goods. Each deduction has to be documented for the specific goods, and the profit figure is the one CBP will question most.